Q - Is Capital Gains Tax (CGT) calculated and charged when a property is sold?
A - Yes, provided the property does not have Type set to Main Residence. There is no CGT charge on the sale of one's main residence.
CGT is based on the Effective Purchase Value (i.e. cost basis) of the property. The software will calculate CGT based on the difference between the sale price and the effective purchase value, provided the property is not tagged as a main residence, in which case it will not be subject to CGT.
The annual CGT allowance as well as any 'carried over' capital losses incurred throughout the plan, or from before the plan start (if entered on the Taxes screen), will also be taken into account when calculating CGT.
Note that 2016/17 Capital Gains Tax rates, on the sale of second properties, remain at 18% and 28%, even though they have fallen to 10% and 20% for other capital gains. Where the individual is a basic-rate taxpayer, the software will levy a rate of 18% on that portion of the capital gain that takes the recipient up to the higher-rate (income tax) threshold. On that portion of the gain that falls above the higher-rate threshold, the software will apply CGT at 28%.
Entrepreneur's Relief can also be applied to the CGT calculations, if applicable, using the settings on the Property / Assets screen's Advanced Settings > Taxation panel.
Last updated 20 July 2016 Release 4.1.42